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If the toy ain't broke fix it!

I mean, if the toy is improving every year and becoming less expensive, regulate the sh-t out it.

Another Political Shot at Insulin

Now the politicians want to cap prices on the diabetes treatment in the private market, even as prices have been falling.

By The Editorial Board, WSJ

Nov. 27, 2022 3:52 pm ET

Raphael Warnock is fighting to save his Senate seat in Georgia’s Dec. 6 run off, and the Democrat has been running on his efforts to cap insulin prices. Alas, this lousy idea could hitch a ride through Congress during the lame duck session, so it’s worth revisiting the risks of price controls.

Multiple bills in Congress propose capping what patients pay for insulin at $35 a month. Congress passed such a cap on insulin prices for those covered by Medicare earlier this year as part of the Inflation Reduction Act. A proposal from Sens. Jeanne Shaheen (D., N.H.) and Susan Collins (R., Maine), known as the Insulin Act, aims to cap costs for patients with private insurance.

You won’t read it elsewhere, but the net price of insulin has been falling for years. The problem is that some patients, mostly uninsured, don’t benefit from negotiated discounts and get stuck paying the sticker price. Only about one-fifth of patients with commercial insurance pay more than $35 a month for insulin, according to an analysis from the data company IQVIA.

“Notably,” IQVIA found in a report this year, “the amount spent for prescriptions over $35 has been declining.” This owes in part to Trump Administration IRS guidance that allows high-deductible health plans to cover insulin before families hit the deductible.

In general, patients are paying less at the pharmacy counter, not more. Out-of-pocket insulin costs have declined by $500 million since 2018 across Medicare, Medicaid and the commercial and cash markets. Low-income Americans on Medicaid generally have de minimis co-pays. The large insulin companies also offer co-pay cards to limit out-of-pocket costs for those without insurance.

The Shaheen bill would use various carrots and sticks to prod drug makers into a “voluntary” pricing process. The rigmarole would essentially freeze 2021 prices, precisely as insulin prices are poised to fall further. Generic insulin has entered the market in recent years. That has put downward pressure on prices, and half a dozen more insulin products are in the works. In other words, Congress thinks it’s going after Big Pharma—but it’s shielding the drug companies from competitive price discipline.

No one will take a big bet on a better insulin if there may be a political ceiling on the return, and Congress has been sending investors a loud message that their capital is better invested in the next DoorDash than in new drugs.

The timing couldn’t be worse given the pace of medical progress. The Food and Drug Administration recently approved a drug that can delay the onset of Type 1 diabetes that typically appears in children. The press is sniping that the treatment costs nearly $200,000, though that is a steal compared with years of diabetes management.

To the extent insulin markets are dysfunctional, government bears part of the blame—such as the enormous Medicaid rebates on the drug that distort prices. The cap for Medicare patients passed this year will no doubt result in increased premiums and other unintended consequences. The best thing Congress could do now is decline to make matters worse.

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